Correspondence 0001829126-24-004687 from TCW ETF Trust (CIK 0001831313)
TCW ETF Trust (CIK 0001831313)
Date: July 10, 2024 · CIK: 0001831313 · Accession: 0001829126-24-004687
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File numbers found in text: 333-280156
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ROPES &
GRAY LLP
PRUDENTIAL
TOWER
800 BOYLSTON
STREET
BOSTON,
MA 02199-3600
WWW.ROPESGRAY.COM
July 10, 2024
Nathan McGuire
T +1 617 854 2070
nathan.mcguire@ropesgray.com
VIA EDGAR
Securities and Exchange Commission
Division of Investment Management
100 F Street, N.E.
Washington, DC 20549
Attn: David Manion and Seamus O’Brien
Re:
Registration Statement of TCW ETF Trust on Form N-14 (File No. 333-280156)
Dear Messrs. Manion and O’Brien:
We are writing to respond to the comments of the staff (the “Staff”)
of the U.S. Securities and Exchange Commission (the “Commission”) that you provided telephonically on June 20 and July
1 and 3, 2024 relating to the registration statement of the Trust on Form N-14 (the “Registration Statement”), filed
with the Commission on June 12, 2024 pursuant to the Securities Act of 1933, as amended, in connection with the proposed reorganizations
of Metropolitan West Floating Rate Income Fund, Metropolitan West Investment Grade Credit Fund, and TCW High Yield Bond Fund (each, a
“Target Fund”), with an into TCW Senior Loan ETF, TCW Investment Grade Credit ETF, and TCW High Yield Bond ETF (each,
an “Acquiring Fund”), respectively, each a series of the Trust, as described in the Registration Statement (each a
“Reorganization,” and together, the “Reorganizations”). The Staff’s comments are summarized
below and each is followed by the Trust’s response. Capitalized terms not otherwise defined herein have the meanings set forth in
the Registration Statement.
Comments from SEC Legal Staff
1.
Comment: Where a comment is made with respect to disclosure in one location, it is applicable
to all similar disclosure appearing elsewhere in the Registration Statement.
Response: The Trust acknowledges the Staff’s comment.
2.
Comment: We note that portions of the Registration Statement are incomplete. Please confirm
that all bracketed language and any placeholders will be filled in prior to effectiveness.
Response: The Trust so confirms.
3.
Comment: Please confirm that the ticker symbol and series and class information for the Acquiring
Funds are tagged in the EDGAR file.
Response: The Trust confirms that the series and class information for each Acquiring Fund is tagged in the EDGAR file. The Trust notes that it does not yet
have ticker symbols for the Acquiring Funds, but will include the ticker symbol in future N-1A filings following the completion of the
listing process with the NYSE.
- 2 - July 10, 2024
4.
Comment: With respect to the Senior Loan Reorganization, please explain supplementally why
the Target Fund’s investment management agreement with a conventional management fee is not materially
different from the Acquiring Fund’s investment management agreement with a unitary fee such that shareholder approval
would be required under Rule 17a-8.
Response: The Trust believes that the difference between the investment management agreements
of the Target Fund and the Acquiring Fund is not material, such that shareholder approval
would be required under Rule 17a-8(a)(3) because (i) the nature and level of services provided to the Acquiring
Fund under its management agreement will be equal to or greater than the nature and
level of services provided to the Target Fund under its management agreement, and
(ii) the fee rate paid for the advisory and administrative services to be provided
to the Acquiring Fund under its management agreement will not exceed the fee rate
paid by the Target Fund for the same services. The Staff has permitted a mutual fund
to combine or unbundle advisory and administration agreements without obtaining shareholder
approval provided that the proposed change would not reduce the nature or level of
the advisory or administration services provided to the fund, and the aggregate advisory
and administration fee rate payable by the fund would not exceed the aggregate fee
rate payable by the fund under its existing agreements.1 In these situations, the Staff has recognized that the contractual change described
should not require shareholder approval as shareholders would not be disadvantaged
by the change and obtaining shareholder approval would not serve a useful purpose
and would involve unnecessary costs.
Other than the fee structure/scope of services and the identity of the parties, there
are no material differences between the investment management agreements (“IMAs”)
of the Acquiring Fund and the Target Fund. The Acquiring Fund’s IMA employs a unitary fee structure pursuant to which TCW Investment Management
Company LLC (the “Acquiring Fund Adviser”) will charge the Acquiring Fund a management
fee for investment advisory services based on a percentage of the Acquiring Fund’s average daily net assets and also bears substantially all operating expenses of the Acquiring Fund, subject to
certain stated exceptions. Under the terms of the Target Fund’s IMA, Metropolitan West Asset Management, LLC (the “Target Fund Adviser”) charges
the Target Fund a management fee for investment advisory services based on a percentage
of the Target Fund’s average daily net assets but is not obligated to pay the operating expenses of the Target Fund. Following the Reorganization,
the total annual fund operating expenses of the Acquiring Fund are expected to be
lower than those of each share class of the Target Fund because the fee rate paid
by the Acquiring Fund under its IMA will be less than the fee rate paid by the Target
Fund for the same services. The Acquiring Fund Adviser and the Target Fund Adviser
are under the common control of The TCW Group, Inc., and the Acquiring Fund Adviser
will provide to the Acquiring Fund the same nature and level of services provided
to the Target Fund.
The purpose of the Rule 17a-8 shareholder approval requirement is to prevent a fund from effecting through
a reorganization without shareholder approval changes that it could not otherwise
have effected without shareholder approval. Consistent with the Staff’s guidance, the Registrant notes that the Target Fund and the Target Fund Adviser
could, without shareholder approval, combine the Target Fund’s advisory agreement with an administrative services agreement under which the Target
Fund Adviser would pay the operating expenses of the Target Fund subject to certain
specified exceptions for a combined fee rate that did not exceed the rate previously
paid by the Target Fund for such services and then proceed with the Reorganization
without shareholder approval. The Trust believes that accomplishing this change through
the Reorganization is more efficient and does not believe that combining two steps,
neither of which would individually require shareholder approval, should give rise
to a shareholder approval requirement.
1 See, e.g., Investment Management Staff Issues of Interest, “Advisory
Contracts—Combined Investment Advisory and Service Fees” (October 5, 2012), available at https://www.sec.gov/investment/divisionsinvestmentissues-interestshtml#advisorycontracts-ica and Franklin Templeton Group of Funds, Staff No-Action Letter (July 23, 1997).
- 3 - July 10, 2024
5.
Comment: With respect to the MetWest Floating Rate Income Fund, please confirm that the Adviser’s right of recoupment will not survive the Reorganization.
Response: The Trust confirms that the Adviser’s right of recoupment will not survive the Reorganization.
6.
Comment: With respect to the Investment Grade Credit Reorganization, please explain supplementally
why the Target Fund’s investment management agreement with a conventional management fee is not materially
different from the Acquiring Fund’s investment management agreement with a unitary fee such that shareholder approval
would be required under Rule 17a-8.
Response: Please see the Trust’s response above to Comment 4. The Trust notes that the same response applies with respect to the High Yield Bond
Reorganization.
7.
Comment: Please confirm when the opinion of counsel as to tax matters that is required by Item
16(12) will be filed by amendment.
Response: Consistent with the undertaking reflected in Item 17(3) of the Part C, opinion of
counsel as to tax matters will be filed in a post-effective amendment to the Registration
Statement following the closing of the Reorganizations.
Comments from SEC Accounting Staff
1.
Comment: For the High Yield Bond Reorganization, please incorporate by reference the High Yield Bond Fund’s semi-annual report to shareholders for the fiscal period ended April 30, 2024.
Response: The Trust confirms that the requested change has been made.
2.
Comment: In the fee and expense table for the MetWest Investment Grade Credit Fund, please confirm the management fee for Class M shares. According to the fund’s prospectus, the fee should be 0.35%. Please revise the fee and expense table and
expense example for Class M shares, as necessary.
Response: The Trust confirms that the management fee for Class M shares of the MetWest Investment Grade Credit Fund has been updated to 0.35% and that no further revisions to the fee and expense table
or expense example are required.
3.
Comment: In the capitalization table for the Senior Loan Reorganization, please review and
update the net assets and total shares outstanding figures for the Acquiring Fund
(pro forma). Please also update the net asset value per share figure for the Acquiring
Fund (pro forma), if necessary.
Response: The Trust confirms that the net assets and total shares outstanding figures for the Acquiring Fund (pro forma) have been updated and that no changes to the net asset value per share figures for
the Acquiring Fund (pro forma) are required.
4.
Comment: In the capitalization tables for the Investment Grade Credit Reorganization and
the High Yield Bond Reorganization, please review and update the total shares outstanding
figures for each Acquiring Fund (pro forma). Please also update the net asset value per share figure
for each Acquiring Fund (pro forma), if necessary.
Response: The Trust confirms that the total shares outstanding figures for each Acquiring Fund (pro forma) have been updated and that no changes to the net asset value per share figures for
each Acquiring Fund (pro forma) are required.
- 4 - July 10, 2024
5.
Comment: In the “Supplemental Financial Information” section in Part B of the Registration
Statement, please include a statement that the accounting, tax, and valuation policies
of the Target Funds and the Acquiring Funds are the same or substantially the same.
Response: The Trust confirms that the requested change has been made.
6.
Comment: For all Funds, please confirm in correspondence that there will be no forced sales of portfolio
holdings due to differences in investment restrictions between the Target Fund and
the Acquiring Fund.
Response: The Trust notes that the fundamental investment policies of each Target Fund and the corresponding Acquiring Fund are identical and the non-fundamental investment policies of each Target Fund and the corresponding Acquiring Fund are substantially similar. As a result, the Trust confirms that no portfolio realignment is expected due to differences
in the Funds’ investment restrictions.
7.
Comment: In the “Pro Forma Financial Information—High Yield Bond ETF” section in Part B of
the Registration Statement, please confirm that the net assets figure in Table 3 for
the Target Fund match the net assets figure in the capitalization table for the Target
Fund.
Response: The Trust so confirms.
8.
Comment: In the “Pro Forma Financial Information—High Yield Bond ETF” section in Part B of
the Registration Statement, please include a statement that the accounting, tax, and
valuation policies of the Target Fund and the Acquiring Fund are the same or substantially
the same.
Response: The Trust confirms that the requested change has been made.
* * *
- 5 - July 10, 2024
We hope the foregoing responses adequately address the Staff’s comments. Should you have any further questions or comments, please do not hesitate
to contact me at (617) 854-2070 or nathan.mcguire@ropesgray.com. Thank you for your attention to this matter.
Sincerely,
/s/ Nathan McGuire
Nathan McGuire
cc: Brian McCabe
Yana Guss